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Tuesday, September 13, 2016

Govt not to spend much on sick PSUs: Report

THE government is not in favour of spending much of the public money on PSUs which are incurring huge losses and have no scope for their turn around.
Government think tank Niti Aayog that has been tasked to prepare a comprehensive roadmap on possible revival/sale of sick PSUs has given a list of 74 PSUs to the government which are running into losses, out of these, 26 have no scope for revival.
Media reports quoting official sources said, the government will... soon take an action on them and see if some kind of merger plan will help or closure is the only option.
The PSUs that are likely to be sold government will auction their building, equipment and machinery through e-auction. Any free-hold land belonging to these companies will be sold to their respective state governments on the prevailing market price. According to Niti Aayog, the 26 PSUs need to be closed. But five out of the list of 74 can be revived through by being handed out to private sector. Government-run hotels have been included in the list of five.
In the case of outright closure of sick PSUs, the final guidelines for disposal of liabilities, including land and employees, would be done by the department of public enterprises (DPE).
The government has started the process of sale in 14 hotels of India Tourism Development Corporation (ITDC). Other PSUs up for strategic disinvestment include Hindustan Photo Films, Tyre Corporation and Richardson & Cruddas. Niti Aayog chief executive officer Amitabh Kant had earlier said that Niti Aayog will identify sick units and the department of investment and public asset management (DIPAM) will be taking it forward.
The government has set a target of Rs 56,500 crore in this fiscal to come through disinvestment this fiscal.
The government will look at PSUs whether if some kind of merger plan will help or closure is the only option Niti Aayog has given a list of 74 loss making PSUs to the government and identified 26 which are to be closed. In the case of closure of sick PSUs, the final guidelines would be done by the department of public enterprises. The government has set a target of Rs 56,500 crore in this fiscal to come through disinvestment this fiscal.
Of the total 74 loss-making companies 26 have been identified for closure or winding up, five for long-term lease or management contract, three have been proposed to be merged with the parent company while two have been identified for maintaining status quo.
"In case of subsidiaries the revival process can be approached through merger with the parent company," the Aayog noted in its report.
Earlier, kicking off PSU reforms, NITI Aayog has submitted to the Prime Minister's Office a roadmap for closure and strategic sale of government stake in some public sector units. "NITI Aayog has submitted two separate lists of state-run companies, one comprising of sick PSUs which may be closed down and the other a list of firms which should be privatised," a source said. "Strategic sale means that the government will bring down its stake to 49 per cent or below in such PSUs," the source added. Finance Minister Arun Jaitley had said in his Budget 2016-17 speech that NITI Aayog will identify PSUs for strategic sale. Under the roadmap, the Aayog dealt with two sets of issues -- one pertains to decision regarding sick firms which have been making losses, while the second is disinvestment, or strategic sale where government wants to reduce its stake. Government has set a disinvestment target of Rs 56,500 crore for this fiscal. Of this, Rs 36,000 crore is to come from minority stake sale in PSUs and Rs 20,500 crore from strategic sale.
Government began the disinvestment programme for the current fiscal with 11.36 per cent stake sale in NHPC. The government raised Rs 2,700 crore through the process.
It has lined up as many as 15 PSUs, including Coal India, NMDC, MOIL, MMTC, National Fertilisers, NALCO and Bharat Electronics, for stake sale in current fiscal.